Law And The Judiciary

Courts Overturn Lawyers' Huge Fees

In suits ranging from recent tobacco litigation to ordinary auto accidents, clients are beginning to get some relief from staggering legal fees.

In a landmark ruling, a Colorado appeals court several years ago upheld a verdict against a lawyer who had pocketed one-third of a quick $100,000 settlement against an insurance company. His client, an 80-year-old woman who had fractured her skull in an auto accident and been hospitalized for five weeks, sued the lawyer on the grounds that his cut -- customary under the circumstances -- amounted to highway robbery.

  • Experts say the case marks the first time that an appeals court has ruled that charging a standard contingency fee in a personal injury case devoid of any risk is illegal and unethical.

  • Last month, an Iowa lawyer was suspended from practice for six months for trying to take one-third of a workers' compensation claim -- in which he had devoted just 20 hours to his client's case.

  • A Tennessee court recently slashed the contingency fee of a lawyer in a probate case -- finding the fee worked out to an "unreasonable, exorbitant and improbable" $950 an hour.

  • A Florida judge recently nullified a fee contract that would have given private lawyers 25 percent of an $11.3 billion tobacco settlement they won for the state last summer.

Legal experts say the judges are dusting off ethical rules that limit lawyers to charging "reasonable" fees, no matter what their contracts say. Lawyers are being required to tell their clients up front that hourly rates may save them a lot of money.

Supporters of contingency fee arrangements say they are justified because they allow people who do not have the funds up front to obtain legal representation. And since clients aren't charged anything unless a recovery is made on their behalf, lawyers argue they're entitled to a premium over hourly rates for risking earning nothing in a losing cause.

Source: Richard B. Schmitt, "Courts Whittle Down Lawyers' Fat Contingent Fees," Wall Street Journal, January 28, 1998.


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